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Aug 20, 2018

Oil Price at Close Report: Brent oil stabilizes near $72 as trade war concerns ease I CNBC

Oil futures rose on Monday after weeks of declines,
supported by easing concerns over a potential trade war between the
United States and China, as well as an expected fall in supply from Iran
due to U.S. sanctions.U.S. West Texas Intermediate (WTI) crude futures for September delivery ended Monday's session 52 cents higher at $66.43 per barrel. That contract expires on Tuesday. The October WTI contract was trading up 32 cents at $65.53 at 2:15 p.m. ET.Brent crude futures, a benchmark for international oil prices, were up 57 cents, or nearly 1 percent, at $72.40 per barrel.
Last week, Brent declined for a
third consecutive week, while WTI fell for a seventh week due to
concerns about a slowdown in economic growth because of U.S.-Chinese
trade tensions and weakness in many emerging economies.
However, China and the
United States will hold trade talks this month, the two governments said
last week, in an effort to resolve an escalating tariff war that
threatens to engulf all trade between the world's two largest economies.

Still, White House economic adviser Larry Kudlow
said Beijing should not underestimate President Donald Trump's resolve
in what Kudlow called a "battle to eliminate tariffs and non-tariff
barriers and quotas, to stop the theft of intellectual property and to
stop the forced transfer of technology."
"Part of the weakness
we've seen in crude oil has largely been due to trade as people are
concerned that increasing tariffs and tensions on trade are going to
increase the level of uncertainty and potentially reduce global GDP
demand," said Brian Kessens, portfolio manager and managing director at
Tortoise.
"Anything that reduces those tensions, you can see oil generally move back the other way."
Traders said U.S.
sanctions against Iran were also supporting prices. The U.S. government
has introduced financial sanctions against Iran which, from November,
will also target the petroleum sector of OPEC's third largest producer.
On Monday, Iran asked the
European Union to speed up efforts to save a 2015 nuclear deal between
Tehran and major powers, which Trump abandoned in May. Most EU companies
have pulled out of Iran for fear of U.S. sanctions and Tehran said
France's Total had officially exited Iran's South Pars gas project.
"We continue to believe
that despite all of the political goodwill that may exist in Europe,
there is no practical way that many of the sizeable European buyers of
Iranian crude can be protected from U.S. sanctions," JBC Energy said in a
note.

However, China signaled it wanted to continue
buying large volumes of Iranian oil despite U.S. pressure and was now
switching to Iranian tankers to skirt U.S. sanctions on ship insurers.
A strong U.S. dollar and
currency weakness in oil-consuming nations like Turkey and India is
continuing to impact the crude market.
"The dollar strength is
really becoming a problem for a lot of the countries that are
struggling," said John Kilduff, founding partner at energy hedge fund
Again Capital. "They're having to pay for this oil in dollars, and their
currencies are getting pounded, so there's real concern about the
demand story now."
In the United States,
energy companies last week kept the oil rig count unchanged at 869,
according to the Baker Hughes energy services firm.
"The recent softening in
benchmark prices should temper the pace of growth in U.S. exploration
and production activity, and lead to slower overall output growth," Bell
said.— CNBC's Tom DiChristopher contributed to this report.

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